The FTSE 100 is expected to open lower on Thursday, despite a strong lead from its US counterparts.
Britain’s blue-chip index performed strongly on Wednesday, with contributions from BP Plc (LON:BP), Royal Dutch Shell Plc (LON:RDSA) and J Sainsbury Plc (LON:SBRY) contributing to the index’s 1.1% gain for the day. However, according to IG data, the FTSE 100 is likely to open 32 points lower than its Wednesday close of 7,203.97. Other European indices, such as Germany’s DAX and the French benchmark CAC 40 are also seen opening lower.
Their American counterparts enjoyed solid gains yesterday, as strong quarterly results from retailers such as Target and Lowe’s boosted investor sentiment. The Dow Jones Industrial Average finished the session with a 0.9% increase and the S&P 500 and Nasdaq Composite posted similar gains.
The release yesterday of the highly anticipated minutes from the last Federal Reserve meeting showed that the US central bank officials don’t see last month’s rate cut as a “pre-set course” for future cuts.
The US 2-year/10-year US yield curve flattened and then briefly inverted following the minutes. The indicator is often monitored as a precursor for recession.
Back in Europe, the UK prime minister Boris Johnson is set to meet France’s President Emmanuel Macron today to discuss possible ways to avoid a ‘no-deal’ Brexit. Yesterday, Johnson met German chancellor Angela Merkel, who challenged him to propose alternatives to the Irish border backstop within the next 30 days. However, Macron later indicated that France did not support renegotiation of the terms struck by Johnson’s predecessor Theresa May.
Johnson has said that the UK will leave the EU on 31 October with or without a deal. France reportedly believes that a ‘no-deal’ Brexit is now the most likely scenario.